The water pipe wholesaler has asked for a cash budget for June. After testing the company records, you find the following:

a. June 1 cash balance is Rp1,345

b. Actual sales for April and May are:

April May

Cash sales of IDR 10,000 IDR 15,000

Credit sales of IDR 50,000 IDR 85,000

Total Sales of IDR 60,000 IDR 100,000

c. Credit sales are billed for a quarterly period: 50 percent in the month of sales, 30 percent in the second month, and 16 percent for the third month. Sales that are billed for the third month are charged with 1.5 percent late fees, but only half the customers affected by these late fees pay the fees, and the company owner does not think it is valuable enough for him to try to collect the remaining half. The remaining sales are not collectible.

d. Inventory purchases average 80 percent of total sales a month. Of these purchases, 40 percent is paid for in purchases. The remaining 60 percent is paid in the following month.

e. Salaries and total wages of Rp10,300 in one month; this amount includes Rp54,500 of salaries paid to the owner.

f. Rent IDR 2,200 per month

g. The tax paid in June is IDR 5,500

The owner also tells you that he estimates cash sales of Rp. 20,000 and credit sales of Rp. 90,000 for June. There is no minimum cash balance requested. The company owner does not have access to short-term loans.

Requested:

1. Prepare a cash budget for June. Enter supporting reports for cash collection and cash payments.

2. Does the business show a negative cash balance for June? Suppose that the owner no longer has any hope of making credit applications for the business. What recommendations would you give to deal with the negative cash balance?